2 evenspringspracticeset problem data4

ACC 2301 Even Springs Practice Set Information p 1 of 53

Even Springs Trading CompanyA Practice Problem

INTRODUCTIONThis short practice problem gives you, the student, an opportunity to practice the accounting concepts and skills acquired in an introductory financial accounting course. The objective of the practice problem is to have you complete a comprehensive example of the accounting cycle. You will evaluate transactions, use the general journal to record events, adjust the accounts,close the temporary accounts, maintain an ongoing general ledger, prepare a worksheet and prepare financial statements.

In following the instructions for the Practice Problem, keep in mind that an accountant prepares accounting

records in a neat fashion and in proper format. If you prepare this practice set by hand, using a pencil for the

accounting work gives you a better opportunity to maintain neat records.

COMPANY OPERATIONS

The Even Springs Trading Company, a sole proprietorship owned by Max Gator, began operationsat the beginning of the month in SmallTown, Texas. Even Springs sells items such as small officemachines, office supplies, magazines, make-up, hair products, etc. and is located in a new shopping mall. Even Springs sells on account to some customers and on a cash basis to other customers.

Even Springs has retained you to install the company’s manual accounting system, to implementthe system, to maintain the company’s accounting records, and to produce monthly financialstatements. The accounting system for accounting records and financial statements includes the general journal, general ledger accounts, the worksheet, the Multiple-Step IncomeStatement, the Statement of Owner’s Equity, and the classified Balance Sheet.

Additionally, Even Springs has asked you to prepare the unadjusted trial balance, theadjusted trial balance, and the post-closing trial balance.

Even Springs Trading Company, continued

Even Springs Trading Company specifies these accounting method choices:

2 -- special journals or subsidiary ledger accounts are not yet needed;

7 -- take a full month of depreciation for assets purchased in the first half of the month;8 -- take a half-month of depreciation for assets purchased in the second half of the month.

REQUIREMENTSAs the accountant for Even Springs Trading Company, you must1 -- Record the transactions for the month in the general journal.2 -- Post the general journal entries to the general ledger accounts and also provide the proper referencing and running totals.3 -- Prepare the trial balance, based on the ledger balances, before adjusting entries are made.4 -- Prepare the worksheet.5 -- Prepare any necessary adjusting journal entries to the general ledger accounts.6 -- Post the adjusting journal entries to the general ledger accounts.7 -- Prepare the adjusted trial balance, based on the ledger balances.8 -- Prepare the closing journal entries as of the month end.9 -- Post the closing journal entries to the general ledger accounts.10 -- Prepare the post-closing trail balance, based on the ledger balances.11 -- Prepare the financial statements, including the

Statement of Owner's Equity

1 -- use the gross method to record all purchases and all sales;

3 -- do not make any provision for income taxes since this is the first month of operations;4 -- use the perpetual inventory method; Hint: Determine the cost per unit for each inventory purchase.

5 -- record inventory cost valuation on a FIFO basis;6 -- use the accounts receivable method for computing bad debt expense;

Multiple-step Income Statement

classified Balance Sheet

Even Springs Trading Company, continued

CHART OF ACCOUNTSAccount

101 Cash105 Accounts Receivable106 Allowance for Doubtful Accounts108 Inventory110 Office Supplies120 Prepaid Rent123 Prepaid Insurance125 Store Fixtures126 Accum. Depr.-Store Fixtures130 Office Equipment131 Accum. Depr.-Office Equipment200 Accounts Payable205 Salaries Payable210 Interest Payable215 Notes Payable300 Capital305 Withdrawals400 Sales Revenue402 Sales Returns and Allowances404 Sales Discounts501 Cost of Merchandise Sold510 Salaries Expense512 Freight-Out514 Depreciation Expense516 Rent Expense518 Bad Debts Expense520 Utilities Expense525 Supplies Expense530 Insurance Expense535 Interest Expense540 Bank Charges Expense

Number Account

NOTE: All accounts are specified. Do not create any new accounts.

NOTE: List each account, in numerical order, in the general ledger.

NOTE: Each account listed on any trial balance or the worksheet should be listed in numerical order.

ACC 2301 Even Springs Practice Set Transactions p 4 of 53

Even Springs Trading CompanyTransactions

1 Max Gator contributes the following as start-up capital for Even Springs Trading Company:Cash $ 35,000.00 Equipment (to be depreciated on the straight-line basis) $ 50,000.00 The equipment is estimated to last the following number of years 5The estimated salvage value at the end of the estimated life will be $ 5,000.00

1 Max hires a clerk to help with stocking of inventory and sales. Max will pay the clerk a monthly salary of $ 2,800.00 Max has instituted a payroll process of paying employees on the first and fifteenth of each month.

1 Even Springs borrows cash from the Small Town Bank in the amount of. $ 30,000.00 The loan is for one year at the following interest rate of 4%

3 Even Springs finds rental space in the newest mall in town. Even Springs pays M & M Realty the following rent for this month and the next four as well) $ 8,000.00 Total months of the lease 5

5 Even Springs pays cash to Office Depot for office supplies in the amount of $ 900.00

7 Even Springs orders inventory on credit from Texas Novelties with payment terms of 2/10, n/30.The order was for the following number of items 500The order cost for each item was $ 20.00 The total order on account from Texas Novelties was $ 10,000.00

9 After inspecting the inventory, Even Springs returns the following number of items due to defects in quality 60Therefore, the total amount of inventory returned to Texas Novelties was $ 1,200.00 Even Springs will not expect a refund for any freight charges paid by Even Springs related to this return of inventory

14 After proper consideration of the discount terms, Even Springs pays for the inventory purchased on account

15 Even Springs makes a sale on account to Valley High School (terms 2/10, n/30, FOB destination) The sale was for the following number of items 400The sale price for each item was $ 30.00 The total sale on account to Valley High School was for $ 12,000.00

15 Even Springs paid Cajun Shipping to ship the goods to Valley High. Even Springs will not collect this from Valley.The amount paid to Cajun for the shipping cost was $ 110.00

Date [of an unspecified month]

Even Springs Trading Company, Transactions Continued

15 Even Springs paid the clerk hired back on the first of the month. Nothing was withheld from the clerk's salary payment.

16 Even Springs prepays American Republic Insurance Co. for an insurance policy lasting this number of months 6The amount paid to American for the liability and casualty coverage policy was $ 3,600.00

16 Even Springs buys Even Springs fixtures from Office Depot in the amount of $ 18,000.00 Even Springs made a cash down payment of $ 4,000.00 The remaining balance placed on account with Office Depot was $ 14,000.00 The equipment is estimated to last the following number of years 6The estimated salvage value at the end of the estimated life will be $ 1,000.00 Even Springs fixtures will be depreciated on the double-declining-balance basis

16 Max Gator withdraws the following amount of cash from the company account $ 3,500.00

18 Even Springs receives payment (after discount as appropriate) on the A/R with Valley High

20 Even Springs orders inventory on credit from Small Town Supply Company with payment terms of n/30.The order was for the following number of items 500The order cost for each item was $ 22.00 The total order on account from Small Town Supply Company was $ 11,000.00

21 When the inventory arrives, Even Springs pays Small Town Shipping Company directly for the freight bill of $ 225.00

22 Even Springs makes a sale to the Nearby Shrine. The sale was for the following number of items 400The sale price for each item was $ 33.00 Therefore, the total sale to the Nearby Shrine was for $ 13,200.00 Cash received from Nearby Shrine at the time of the sale was $ 9,200.00 The remaining balance placed on account (terms 2/10, n/30) with Nearby Shrine was $ 4,000.00

23 Nearby Shrine returned this number of items for full refund; it did not have enough room to Even Springs the ite 30

26 $ 310.00

31 Even Springs received its current month's bank statement, which it was able to reconcile after identifying the following:Service charge by the bank in the amount of $ 50.00 Fee for new accounts in the amount of $ 10.00

Even Springs received a utility bill from Small Town Lighting and Power (due 7th of next month) in the amount of

Even Springs Trading Company, Transactions Continued

31 Additional information, possibly related to adjustments, as of the end of month includes:Office supplies on hand $ 100.00 Physical count of inventory on hand of 170Max Gator estimates the following percentage of accounts receivable will be uncollectible 2%

*** Remember that there may be other necessary adjustments in addition to those indicated above

ACC 2301 Even Springs Practice Set General Journal p 7 of 53

Even Springs Trading CompanyGeneral Journal

Day Account Titles and Explanations Ref. Debit

Date Account Titles and Explanations Ref. Debit

Credit

ACC 2301 Even Springs Practice Set General Ledger p 23 of 53

Even Springs Trading CompanyGeneral Ledger

Account: CASH

Day Explanation Ref.

Account: A/R

Account: ADA

Account: Inventory

Account: Office Supplies

Account: Prepaid Rent

Account: Prepaid Insurance

Account: Store Fixtures

Account: A/D - Store Fixtures

Account: Office Equipment

Account: A/D - Office Equipment

Account: A/P

Account: Salaries/P

Account: Interest/P

Even Springs Trading Company

General Ledger

Account: N/P

Account: Capital

Account Withdrawals

General Ledger

Account:Sales Revenue

Account: Sales Returns & Allowances

Account: Sales Discounts

General Ledger

Account: Cost of Merchandise Sold

Account: Salaries Expense

Account: Freight-Out

Account: Depreciation Expense

Account: Rent Expense

Account: Bad Debts Expense

Account: Utilities Expense

Account: Supplies Expense

Account: Insurance Expense

Account: Interest Expense

Account: Bank Charges Expense

Account: Income Summary

Acct. No: 101

Debit Credit Balance

Acct. No: 105

Acct. No: 106

Acct. No: 108

Acct. No: 110

Acct. No: 120

Acct. No: 123

Acct. No: 125

Acct. No: 126

Acct. No: 130

Acct. No: 131

Acct. No: 200

Acct. No: 205

Acct. No: 210

General Ledger

Acct. No: 215

Acct. No: 300

Acct. No: 305

General Ledger

Acct. No:400

Acct. No: 402

Acct. No: 404

General Ledger

Acct. No: 501

Acct. No: 510

Acct. No: 512

Acct. No: 514

Acct. No: 516

Acct. No: 518

Acct. No: 520

Acct. No: 525

Acct. No: 530

Acct. No: 535

Acct. No: 540

Acct. No: 999

ACC 2301 Even Springs Practice Set Trial Balances p 45 of 53

Even Springs Trading CompanyTrial Balance

31st of Month one

Acct. No. Account Titles Debits Credits

Adjusted Trial Balance31st of Month one

Post Closing Trial Balance31st of Month one

ACC 2301 Even Springs Practice Set Worksheet p 49 of 53

Even Springs Trading Company Worksheet

End of Month One

Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet

Acc. # Account Titles Debits Credits Debits Credits Debits Credits Debits Credits Debits Credits

ACC 2301 Even Springs Practice Set Worksheet p 50 of 53

ACC 2301 Even Springs Practice Set Financial Statements p 51 of 53

Even Springs Trading CompanyINCOME STATEMENT

For the month ending on the 31st

NOTE: on financial statements, remember that the columns are NOT debit and credit columnsinstead, columns to the left have more detail and columns to the right have totals

Even Springs Trading CompanySTATEMENT of CAPITAL [or OWNER'S EQUITY]

For the month ending on the 31st

Even Springs Trading CompanyBALANCE SHEET31st of Month one

2 evenspringspracticeset problem data4

Documents

the analysis steps. problem analysis sub-problem 3...

problem 2 answers

coop-1 cardinalities solution package. problem #2 group...

dc circuit – practice problems problem 1 problem 1 –...

cfu teacher models problem 1. students complete problem 2

problem #2

problem analysis using problem tree approach rev 2 (1)

coverage problem 2

problem 9.7-2

ffxmq-p-ducted-engineering-data4 fxmq p ducted engineering...

1 problem 6problem 5 standard 2.2 problem 8problem 7...

chemistry c150 spring 2018 problem set 2 key (10 points)...

1 standards 2, 5, 25 slope intercept form and point-slope...

1 surface area and volume with base 10 blocks introduction...

moot problem 2

data4-stream.netdata4-stream.net/~ · author j é¸ Ã? ?y...

preliminary exam: dr samuel palermo younghoon...

1 polynomial functions problem 4 problem 1 standard 3, 4, 6...

assignment problem 2

problem 1-2